London -LRB- CNN -RRB- -- Phone hacking was widespread at the Daily Mirror newspaper when Piers Morgan was its editor , a former employee testified Wednesday , stopping just short of saying Morgan definitely knew about it .

James Hipwell said that he `` can not prove '' that Morgan knew about illegal eavesdropping , but that it was `` very unlikely he did not know what was going on . ''

Phone hacking `` happened every day '' at the Mirror 's show business desk in late 1999 , Hipwell told the Leveson Inquiry , a wide-ranging government-backed investigation of British press ethics and practices .

Also on Wednesday , Paul McCartney 's ex-wife Heather Mills accused Morgan of using her as a `` scapegoat . ''

Morgan , who now hosts the CNN talk show `` Piers Morgan Tonight , '' testified the previous day that he did not believe phone hacking had taken place when he was editor of the tabloid .

Speaking by video link , Morgan tenaciously defended himself against accusations that he knew more about phone hacking than he has admitted in the past .

Some of the toughest questioning focused on a story based on a voice message McCartney left for his then-wife Mills , trying to make up after a quarrel and singing to her .

Morgan refused to say who played the message for him or where , but admitted under sustained questioning that he believed it was a voice mail .

`` Did you know that was unethical ? '' demanded Robert Jay , the lead lawyer for the inquiry .

`` Not unethical , no . It does n't necessarily follow that it was unethical , '' Morgan said .

Mills Wednesday appeared to try to shoot down speculation that she herself had played the recording for Morgan , after Judge Brian Leveson said only she could legally have given permission for him to hear it and threatened to call her to give evidence .

`` I can categorically state that I have never ever played Piers Morgan a tape of any kind , never mind a voice message from my ex-husband , '' she said on her website .

Morgan declined to respond .

`` Piers Morgan has no additional comments re : the Leveson Inquiry or Heather Mills . His written statement and the complete transcript from the Inquiry can be found online , '' wrote a representative .

In August , Mills told the BBC that a journalist working for a Mirror Group publication admitted hacking her voice mail .

She said a senior Mirror Group Newspapers journalist phoned her and `` started quoting verbatim the messages from my machine . ''

She said she replied : `` You 've obviously hacked my phone and if you do anything with this story ... I 'll go to the police . ''

The journalist responded : `` OK , OK , yeah , we did hear it on your voice messages , I wo n't run it , '' according to Mills .

On Wednesday , former Morgan employee Hipwell painted a picture of the editor as deeply involved in the daily workings of the paper he edited from 1995 to 2004 , comparing the editor to late North Korean leader Kim Jong Il .

Morgan `` was the ` Dear Leader . ' It was all about him , '' Hipwell said .

`` Nothing that happened on that desk happened without Piers knowing about it , '' Hipwell said of the show business desk .

A lawyer for Trinity Mirror , which publishes the Mirror , said the company disputed Hipwell 's testimony and would go into more detail at a future session of the inquiry .

In the past , Morgan has vigorously denied ordering phone hacking at any point during his career .

He struck pre-emptively at Hipwell on Tuesday , pointing out that the journalist had gone to prison over a stock tip scandal and saying he would not be a reliable witness . Morgan was investigated over the stock tip scandal but not charged or convicted of any crime .

Also on Tuesday , Jay , the inquiry lawyer , repeatedly tried to use Morgan 's own words against him to show he knew more about hacking than he admitted , citing his books and interviews in print and on the radio .

Morgan , at times clipped and at times testy , deflected line after line of inquiry , saying the quotes did not mean what Jay implied they did .

The Leveson Inquiry was prompted by public and political outrage at the revelation that another tabloid , Rupert Murdoch 's News of the World , hacked into the phone of a missing teenage girl who later turned out to have been murdered .

Murdoch 's son James ordered the best-selling paper closed over the scandal .

Much of the inquiry -- and a related police investigation -- focus on allegations of phone hacking by the News of the World .

The publisher of the paper , News International , announced Tuesday that a subsidiary had settled with seven people who accused Murdoch 's newspapers of phone hacking .

The claimants included James Hewitt , who was a lover of Diana , Princess of Wales , and other British celebrities .

The newspaper group `` has agreed to pay appropriate sums by way of compensation and costs and have expressed regret for the distress caused , '' News International said in a statement .

The company settled earlier this year with `` G.I. Joe '' actress Sienna Miller and a handful of other claimants , but other lawsuits against the newspaper group are outstanding .

Testimony by former staff of News of the World and News International last week focused on how much News International chief executive James Murdoch knew about hacking by his employees .

Police say notebooks seized from a private investigator working for News of the World contain the names of about 5,800 potential victims of phone hacking .

The process involves calling a cell phone and entering a personal identification number to access voice messages .

CNN 's James Partington contributed to this report .

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A former Piers Morgan employee says he must have known about hacking

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It `` happened every day '' on the Mirror 's show business desk in 1999 , James Hipwell says

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Paul McCartney 's ex-wife accuses Piers Morgan of using her as a scapegoat

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Morgan earlier said he did not believe there had been hacking at his paper